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Pensions – Getting Better Performance For A Comfortable
Retirement
If you
take the fact that the bulk of investment managers cannot get into double
figures on a compound growth basis over five years and very few can out perform
the stock index, then it is obvious you have to be careful with your fund
selection.
This article is all about getting better
pensions performance and will help you separate out the winning funds and asset
managers from the losing ones.
Have you ever seen a fund advertised by
a major asset manager that losses?
We have never seen one, yet the bulk
of funds don’t do well, so what’s going on? Let’s find out.
Selective track records.
The pensions and mutual funds
industry is sales driven so when a fund does not perform it is conveniently
merged into another fund or not promoted. Furthermore, many companies simply
start off funds with small amounts of money and then pick the best one to
promote.
It’s all selective and many investors simply don’t
question the figures and believe the sales patter of the advisor or the glossy
brochure and then wonder why they end up disappointed!
The best you
can expect.
If the bulk of funds cannot beat the share indexes the
best thing for share investors to do is to simply buy index tracking funds.
With their low fees they are the best bet, but if you think about it,
double digit performance figures are about all you can hope for over a 5 year
period.
When you take into account inflation this is hardly great
growth.
Alternatives to target 30% annual growth or more.
You
can however make bigger returns by seeking out managers that are innovative and
rely on performance based fees.
There are many managers who do this.
They may deal in alternative investments such as futures, FOREX or
commodities or simply shares and equities. The aim though is to seek out an
asset manger that has the following:
Low fees based on
performance.
Wouldn’t you rather know that if your investment
manager is not making money for you he is not making money for himself?
Of course, this does not guarantee performance, but at least they have
confidence in their ability and this can give better long term returns.
Funds under management promoted are representative.
As we
have seen one of the tricks of the major companies is merge funds, drop funds
and launch new funds, so that they always have a attractive product for the
sales force.
Many asset managers though, will give you a performance
that is representative of ALL funds under management and this gives true
representation of their management skills.
The fact is, there are a lot
of hungry small managers out there, it’s just a question of doing some
research.
Past performance is no guarantee of future
results.
Or maybe it is.
You know the big mutual funds
will not do well!
A bit flippant, but you can see what we mean if
you look at 5 year holding periods and performance figures for the major asset
managers as a group.
If you are looking to invest in mutual funds then
tracking the index looks the best bet.
Most asset managers don’t
out perform it anyway and you get lower fees on tracking funds.
Final words.
You can also diversify and look for higher
gains look for the smaller innovative managers.
They don’t tend to
have huge sales budgets and rely on performance and are prepared to demonstrate
they have confidence by earning fees in this way.
Seek them out their
there and you may be glad you did.
Learn More about a Legendary
Trader
Why not attend one of our FREE Seminars held in London and
cheshire. click here to book on-line or
telephone 0161 285 4488.
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